As we touched on yesterday, Monday was a wild day! The stock market ended up falling more that 500 points yesterday. We haven't seen a drop like this since 2001 after September 11th! Lehman Brothers filed for Bankruptcy. Merrill Lynch is being bailed out by Bank of America. Goldman Sachs posted a decrease in earnings of 70%! Washington Mutual is on shaky ground. And lastly for now, AIG is reeling big time and it doesn't look good. Their shares have dropped 42% and It looks like it will be very tough for them to raise the capital they need to stay afloat.
For those of you that don't realize how huge AIG is, then brace yourself. They have 1 Trillion in assets and if they can't make good on their obligations, watch out. This will rock Wall Street and it could be the worse blow we have been dealt so far. We will have to see. I find it hard to believe that Bear Stearns gets bailed out, but a company like AIG gets left behind. If AIG falls, there will be so many more people affected that the Bear Stearns fiasco! AIG offers life, auto, and home insurance as well as annuities. These are critical items in a families financial foundation that they count on. Yes, these can be moved to more stable companies and I suggest these people act fast. However, this will only send them sinking further. It is safe to say I don't see this one ending well. A bailout of some kind seems like the only option.
We will all just have to wait and see!
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Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Tuesday, September 16, 2008
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